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Four Reasons You Should Feel Great About Living in America

According to a Rasmussen poll this week, 55% of Americans think the country is on the wrong track. Who can blame them? Government debt is the highest it's been since World War 2. Employment is still 3.2 million below its 2008 peak. Gas prices are rising again. Apparently there's a giant asteroid hurtling our way.

But we also have a lot going for us, especially compared with the rest of the world. Here are four reasons you should be thrilled about our situation.

Compared with historic financial crises, we're doing greatThere's a difference between a recession and a financial crisis. In a recession, things adjust quickly and get back to normal. In a financial crisis, the adjustments drag on for years as consumers and businesses deleverage, paring down debt, and banks remain reluctant to lend as they repair their balance sheets.

But as billionaire hedge fund manager Ray Dalio put it, America's recovery over the last four years "would win our award of the most beautiful deleveraging on record." Here's one way to show what he means:

Our employment crisis is bad. It's been life-changing for millions of Americans. But compared with historic financial crises in the developed world, it could have been multiple times worse -- both deeper, and with a slower rebound. If we had a normal recession, the recovery we've experienced over the last four years would be pitiful. But given the depth of the decline and the severity of the damage done in 2008, it hasn't been half bad.

America has some of the best demographics of any developed country in the worldEvery developed country is aging, including America. That's going to slow economic growth compared with the last half-century, as portions of the population that used to be working, saving, and spending move into retirement and draw down their assets.

But America still has one of the youngest populations in the developed world. Take the Census Bureau's forecast of working-age populations over the next four decades:

America is facing a demographic headwind; Others are facing demographic time bombs, while Japan, South Korea, and Spain are on track to become the global equivalents of Boca Raton. This will be one of America's greatest economic advantages over the next four decades.

American businesses have never been more profitableAny way you slice it, American businesses are doing better than ever -- by a mile. Take corporate profits:

Profit margins, the amount of profit businesses are squeezing out of sales, are at an all-time high. S&P 500 (SNPINDEX: ^GSPC) dividends are also at an all-time high, and have grown by an average of 8.6% a year over the last decade. Companies have 40% more cash on their balance sheets today than they did five years ago, giving them the flexibility to invest and expand when they see fit. American consumers are still in bad shape. What would our prospects be like if our companies were as well -- as is in the case of much of Europe? I'd rather not think about it.

And as economist Nouriel Roubini -- one of the more bearish forecasters out there -- told CNBC recently:

Productivity growth is better [In the U.S.] because in all the industries of the future, we're ahead of Europe and Japan. You look at energy technology, you look at biotech, you look at IT technologies, manufacturing technologies, even defense technology.

Last year, consultancy Booz & Company asked global executives what they thought were the most innovative companies in the world. Eight of the top 10 were American companies, with Apple, Google, and 3M taking the podium. (Toyota and Samsung were the only non-American corporations to make the cut.)

That's important, because there are only two ways to grow an economy long term: population growth, and productivity growth. America has some of best demographics in the developed world, and our innovation takes care of the rest.

We have abundant and increasingly cheap energySome big natural gas companies have struggled over the last two years. Why? Because they discovered so much recoverable natural gas that prices fell to a decade low. And "U.S. oil production grew more in 2012 than in any year in the history of the domestic industry, which began in 1859," writes Tom Fowler of The Wall Street Journal.

Mark Lipschultz, global head of energy at KKR, summed it up last year: "In North America, we've gone from a place where we thought natural gas was scarce to a place where it's abundant. The implications are significant, and it has the ability to create millions of jobs, transform our dependence on foreign oil, change the trade deficit -- it's really dramatic across the spectrum." The Energy Information Administration predicts U.S. oil imports will fall to 6 million barrels a day next year -- their lowest level in 25 years. That's great news, and it slashes our trade deficit.

America's cheap natural gas is also a big competitive advantage. Natural gas is difficult to transport, so prices tend to differ substantially among global regions. In December, U.S. natural gas cost $3.30 per million BTUs, compared with $10.60 in Europe and $16.70 in Japan. That makes manufacturing in America more enticing than it's been in decades, and provides the incentive to export fuel around the globe. As John Mauldin put it:

If we start exporting value-added natural gas, in the form of fertilizers and plastics and other products that you make from natural gas, we could have a positive trade balance in less than ten years. That would be a shock to the world. Nobody sees that coming.

That would make the dollar so remarkably strong, when combined with the balanced budget, that we would actually deserve to be the reserve currency again. America could be the America that we all think that it should be in our mind, that we would like it to be ... I think America really could have our finest years in front of us again.

I do, too.

What about you?

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Another advantage which may be difficult to graph is the number of generations since becoming a developed country. We have the advantage of passing wealth from one generation to the next while many more newly developed countries are still "start ups".

Well, you have identified a number of positives, but the corporate profits also demonstrates a weakness: that monopoly and oligopoly power is so strong that record levels of profits are possible in a rather weak economic situation. And while corporate America is OK, the middle class is slowly sinking as many of these jobs are eliminated or reduced significantly in pay -- because there is little market power for employees, except for super stars. Corporations are also able to best harness technology for its ends. Yet buying power is sliding away, while average income in Canada has moved ahead of average income in the U.S. Sweden and Norway are managing to keep their middle class society alive and well. While the official unemployment rate in the U.S. is down, the unemployed rate is still very high, with many people having given up on trying to secure decent employment, trying to live off their resources (including savings meant for old age). All this portends weaker purchasing power for a long time to come.

Then there is the monsters in the closet: will the banking system which has not really been reformed from their behaviors that created much of 2008's crash, and will our monetary system crash because of the huge federal government debt and people's lack of faith in the U.S. economy. Some economic positives at this point in time do little to address those monsters.

I have no doubt that free Americans could keep US prosperity going to centuries. However an increasingly invasive, consumptive, militaristic and insolvent central government will stifle our great society in the same way central power smothered every once great society through history. Cherry picking positive news and cheerleading won't change that fate.

Your chart seems to suggest that the upward projection of the bold red line representing the US will continue. But what about the accumulated debt? Reinhart & Rogoff wrote the classic study of the history of over indebted countries, “This Time is Different: Eight Centuries of Financial Folly.”

From Bloomberg, "The U.S. and other developed economies with high public debt potentially face “massive” losses of output lasting more than a decade, even if their interest rates remain low, according to new research by economists Carmen and Vincent Reinhart and Kenneth Rogoff." http://www.bloomberg.com/news/2012-04-30/reinharts-rogoff-se...

With reasonable policies and some fiscal discipline we can come out of this. But we're not seeing those policies developing. This article is not a full, or even accurate, description of our situation.

As an American who longs to return home after one or two more years working abroad, let me tell you why I have spent over 20 years in East Asia:

1) super low taxes

2) extremely low health care costs

3) abundant work, easy to find

4) general living expenses low

And that does not touch learning a foreign language or seeing foreign countries. The best part has been the perspective gained when looking at my own country.

Here's some things that make me worry about my excellent country, the USA:

1) We still have a huge number of guns in the hands of civilians - one for every man, woman, and child in the country, last time I checked. We need to protect our school kids and make sure they and both criminals and crazies don't get deadly firepower.

2) no sincere regulation of big business or the relationship between big business and government. We don't even have the structures set up to properly question things. All you have to do is look at the resumes of members of the Federal Reserve and the Treasury. Wonder how many times you will see the words "Goldman Sachs"?

3) American love of innovation and dislike of regulation leads to rushing headlong into new technologies without considering the scientific or possible health consequences. Genetically modified foods and fracking are two examples.

One thing I will say that people back home in America do not appreciate enough of is the vast natural beauty. If you have not appreciated nature recently, then you may as well be living in some Asian sweatshop! Go enjoy a mountain or beach.

One sided view. Life is more than about money. I live in the US and I see some positive things but mainly negatives. If you are rich you can escape the real world and live in your bubble. If you are in the lower 47% life is no fun.

The US government is constantly eating away at freedom and liberty, not only in the US but also worldwide. My bank in Europe cancelled my brokerage account because of pressure from the US.

Personaly, I can hardly wait for an opportunity to leave the US for good.

Good article Morgan. Its funny how so many see a cloud in every silver lining. The article was titled 'four reasons you should feel great about living in America.' I'm sure that there are more than 4.

As a European I agree that the US has a lot going for it. (So too has my own country by the way)

Recently a lot of analysts and 'experts' have been predicting a market correction some scary ones predicting a downright depression e.g. DOW 6000. And all simply because the indices are at 1500 / 14000. With all the positives out there I am suspicious of the motives of these doomsayers. I hope that the MF will do more to encourage its members to hold their nerve and not sell randomly based on these opinions of so called experts.

I recall reassuring words from Tom G in the worst days of 2009 telling members to hold their nerve and buy good stock rather than sell in disgust. Anyone that heeded his advice then have reason to be grateful today.

Of course all of this "hopefulness" is dependent on the outcome that the Matt Damonification movement fails in its goal to derail frakking under the ridiculous notion that the only "moral" forms of energy are solar, wind or from chicken poop.

When you start seeing articles on why it's great to be an American, then you know you need to worry.

Let's be honest. How many people come home from work, order fast food, and sit down in front of a television set with a couple of six packs until they pass out? Don't tell me this is unusual. The quality of life relative to the real standard of living of the average person is pretty bad. I agree that given the material advantages most people enjoy, they could do better. Much better.

sczc said all of the right comments but left out what this means. We need to get government out of the way of impeding some of these businesses that want to return manufacturing back to the US. While the economic climate might be welcoming, the current White House administration certainly is no friend to business. Obama himself referred to private business as "the Enemy." Now I lived in Northeast Ohio when the Cuyahoga river caught fire however I'm not a tree-hugger either, so if manufacturing is to return the EPA needs to create responsible legislation rather than draconian measures it takes now. If both the political and economic winds come together to return manufacturing back to this country, we can see a return to prosperity.

Good article. I'm especially excited about natural gas and the implications of it for reduced energy independence.

The only bone I would pick is with corporate profits being at an all-time high. It's true, however this is a mean-reverting series. So profits being at an all-time high is almost surely a peak that will decline from here on out. If that's not a true statement, then "this time must be different", and I'm not falling for that again!

It is easy to lose sight of our advantages and indomitable spirit in the face of our daily challenges.

I remember a conversation I had with John Mauldin years ago, just as the financial crisis was getting underway. In spite of the doom and gloom in the air, and in spite of the fact that most call John a permabear, I remember him saying something to the effect of "Never bet against the USA. That has historically proven to be a very bad bet."